WTO NEWS: SPEECHES — DG PASCAL LAMY

“Trade — an engine for growth and jobs”


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Ladies and Gentlemen
Dear friends

It is a pleasure for me to be at this conference organised by the EU40. You represent the voices of the young generation in the European Parliament. These voices are crucial in the current European debate. They are also crucial to the debate about globalisation and trade, its benefits and its challenges.

The topic you have chosen is timely.  Europe is facing a massive challenge; how to ensure its citizens remain on board for the much needed structural reforms, while restoring growth and creating jobs. In other words, how can Europe combine reforms and growth and ensure solidarity and austerity.  For one thing is sure: European citizens will not support reforms unless they see a  light at the end of the tunnel in the form of jobs.

You have chosen the theme of trade as an engine for growth, and I cannot but support your choice.

In 2012, the contribution of trade to European GDP should enable the EU economy to avoid falling back into recession despite weak domestic demand.  And the contribution of exports to growth will only increase in future, as 90% of global economic growth by 2015 is expected to be generated outside Europe, a third of it in China alone.

Today, more than 30 million jobs in Europe – around 10% of European workforce, depend on European sales to the rest of the world. This is an increase of 50% compared to twenty years ago.

Furthermore, the import content of EU exports has increased by more than 60% in the last twenty years to reach 13 %. There are European jobs linked to these imports too.  While the import content has risen sharply it remains much lower than the world average of 40%.  What does this mean?  It means that the domestic added value content of European exports is higher than the world averageand that the job content of Europe's exports is high.  Hence the crucial importance of international trade to reduce unemployment at a cost it should be acknowledged, of higher qualifications for these jobs.

There is very little I need to add to make the case for trade in the European Union. The figures speak for themselves.

Consolidating open and transparent links with the world's new centres of growth is essential to Europe's sustainable economic recovery.  Trade opening offers Europe an effective tool to promote pro-growth reforms through innovation and stronger productivity.

Let me briefly mention three shaping factors that are crucial for a successful trade policy in today's world.

The first the importance of participation in  global value chains. Second is the rise in importance of non-tariff measures and  third the  vital importance of services to modern economies.

We have moved from trade in products to trading in tasks. These tasks are spread across countries and often across continents along value chains. In global production chains, imports matter as much as exports. It also means that obstacles to trade in the form of burdensome customs procedures have a disproportionate impact on the ability of countries to trade. It hampers their competitiveness. This is why it makes eminent sense to conclude the on-going WTO negotiations on trade facilitation. Such an agreement would reduce the costs of customs procedures from current 10% of the value of trade, which was $18 trillion in 2011, to 5%. 

The second shaping factor of trade today is the rise in importance of non-tariff measures. Such measures  can encompass a very broad range of policies –most of them  aimed at serving specific public policy objectives, such as health, safety or the quality of the environment.  While legitimate and indeed necessary, the question is how these measures are designed and how they are implemented.  The danger from a trade policy perspective is that they may be designed or implemented in ways that unjustifiably restrict trade. 

The proper management of non-tariff measures is among the greatest challenges we face in international cooperation.  Levelling the playing field in this area raises challenges of a different nature to those related to tariffs. The proliferation of preferential trade agreements with divergent approaches to public policies may result in non-tariff measures constituting serious obstacles to trade. This possibility of incidental divergence strengthens the case for multilateral coherence.  

The third shaping factor is the growing importance of services for our economies, and in particular developing countries. This calls for a new global consensus to open services trade and to secure this opening in a set of global rules. Again, given the proliferation of global value chains, it is through multilateral agreement that we can most effectively level the playing field.

I hope with these short comments I have convinced you that there is a space for a robust trade agenda in the mix of macroeconomic policies that countries have at their disposal. I hope also to have convinced you of the importance of global trade opening and rule-making as the best way to achieve balanced and sustainable outcomes.  Europe has a vital role to play in building this trade agenda and the European Parliament can and should contribute forcefully to this endeavour.

I count on the EU 40 to lead the way. Thank you for your attention.

 

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